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Monday, July 19, 2010

TX Public Policy Foundation Analysis on Gulf Oil Spill

Financial Times online reports that Britain's Prime Minister Cameron will meet with President Obama this week to discuss the need for maintaining BP's financial viability. The oil spill in the Gulf of Mexico not only affects the financial well-being of tens of thousands of Americans but also Brits depending on pension dividends from BP.

The political attacks on BP in the US Congress have continued this week, with allegations over the company’s role in the release of Abdel Basset al-Megrahi, the convicted Lockerbie bomber, and a threat to stop it securing any more offshore exploration leases.

BP is concerned that the pressure from US politicians could cripple the company, leaving it vulnerable to a bid from ExxonMobil, the largest US oil group.

Carl-Henric Svanberg, BP’s chairman, met Mr Cameron on Friday to urge him to help counter the attacks being directed against BP from Capitol Hill.

Mr Cameron told Mr Svanberg that he did not want to inflame the row but that he would deliver a firm reminder to Barack Obama, US president, and congressional leaders of the importance of BP to the UK economy.

“The prime minister will be keen to make clear how important the company is as a UK employer and how important it is for pension funds,” one official said, speaking after the 45-minute meeting with Mr Svanberg.

This ties into another interesting aspect of the oil spill fallout - the deliberate attempts of the Obama administration to bring about an oil shortage within the U.S. due to its dangerous policy decisions. Not only has presidential leadership gone missing during this national crisis, the policies being made by the Interior Department and the EPA have strengthened the potential of further dire economic consequences along the Gulf coast.

Mario Loyola is a policy analyst in the Armstrong Center for Energy & the Environment at the Texas Public Policy Foundation, a non-profit free-market research institute based in Austin, Texas. He has written extensively for national and international publications, including features for National Review and The Weekly Standard, and op-eds in The Wall Street Journal He writes the cover story for the latest issue of National Review magazine.

According to Loyola's analysis, much of what I have been writing about since the spill is in the works due to decisions being made by those determined to shut down oil drilling in the Gulf of Mexico. Actions taken by the administration include the moratorium on offshore drilling, demands for assets before actual liabilities are proven, a standstill on issuing emissions permits for Texas refineries, and the lack of permits processed for license renewals of shallow water wells. The oil drilling industry can not survive like this. This appears to be the Obama plan.

Loyola notes that oil rigs will simply move overseas. As I have previously noted, Diamond has already announced that the company will move two rigs currently in deep water to Egypt. Blocking new wells prevents hundreds of thousands of barrels of oil a day from production. Diminished supply will increase prices to consumers. And that to the fact that foreign oil purchases will increase. Nations who are not our friends will profit as well as increase the likelihood of accidents to the environment - tankers carrying oil spill oil in much higher quantities than oil rigs. Remember, the Exxon Valdez was a tanker accident, not a drilling accident. The Deepwater Horizon tragedy is the first in the Gulf of Mexico's sixty year history of drilling in America's waters on the Gulf coast.

This administration is determined to decimate an entire industry for its own ideological tunnel vision. The continued insistence on a drilling moratorium and the ratcheted up regulations on an industry known as the most regulated in our country, is a knee jerk reaction which will cost Americans dearly in the pocketbook.